DESPITE TERRORISM, TOURISM IN ISRAEL CONTINUES TO SKYROCKET

After a slump at the end of 2015, 2.9 million tourists arrived in 2016, an increase of nearly 4% from the previous year, and in the latest three-month period (March, April, May), tourism rose to a record annual rate of 3.4 million, 5% above last year. For the February through April period, the number of foreigner-tourist nights at Israeli hotels rose 6% from last year to an annual rate of 10.3 million.

Why improbable? Since October 2015, Israel has been experiencing a wave of “lone-wolf terrorism” and tourism is known to be sensitive to terrorism.

The latest wave of terrorism peaked in the winter of 2016, when there were almost daily attacks, then subsided and rose again during the month of Ramadan. Nevertheless, 4.5% more American tourists arrived in 2016, and in the last four months of 2016, at the peak of the new terrorism wave, “all time records were broken for tourist entries,” the Ministry of Tourism reports.

Compared to the previous year, 69% more Chinese tourists arrived in 2016, and Chinese tourists spend more in Israel on average than tourists from any other country.

Tourism is important to Israel’s economy.

While it comprises only 4% of gross domestic product, it employs about 8% of the labor force – mainly in low-paying service jobs, but nonetheless vital for those without higher education.

A Bank of Israel study in 2014 showed, in general, how sensitive inbound tourism is to war and violence. Tourist arrivals fell 30%, from 110,000 a month to 70,000, after the first intifada broke out in 1987. They recovered sharply during Operation Desert Storm, then fell again in March 1996 after a Gaza war (Operation Grapes of Wrath). The outbreak of the second intifada in September 2000 had a disastrous effect – tourist arrivals fell from 200,000 a month in the summer of 2000 to 45,000 at the outbreak of the second Iraq war in March 2003. Again, sharp declines occurred during and after the Second Lebanon War, which began in July 2006, and Operation Cast Lead, at the end of 2008.

So how do we explain the current tourist boom in the face of an ongoing campaign of Palestinian violence? There are, I think, two explanations: one is simple; a second is more complicated.

Let’s begin with the simplest.

It’s partly due to media fatigue. Potential tourists learn about terrorist attacks through the media. Highly dramatic attacks – burned and blown-up buses or strewn bodies after a truck runs over victims – are shown vividly worldwide on TV news and social media.

But a knife attack on a soldier? After several of those, foreign media tire of them. Lone-wolf terrorist attacks just don’t have shock and awe value for media. There is no mayhem, so foreign reporting becomes sparse.

For tourists – out of sight, out of mind.

“When exposure of potential tourists to the level of terrorism in Israel declines, the [number of] visitors to Israel tends to rise,” note the Bank of Israel economists.

There is a more complicated explanation, presented in a 2010 S. Neaman Institute study by Sharon Regev Teitler (Kinneret College) and Benjamin Bental (University of Haifa), “Terrorism Risk and Its Impact on Tourism.”

First, they note the enormous impact of the second intifada on Israel from September 2000 to February 2005, which slashed tourist arrivals by half. They ask whether this is rational. “In Israel,” the authors note, “which is regarded as a dangerous destination, the probability… of a tourist suffering damage due to an act of terrorists… was 0.0000292 in 2000 and 0.000175 in 2001. Why, despite the small probability of getting hurt by a terror attack, [is] the effect of a potential attack so big? “ The reason for the high sensitivity to events of terror is not high aversion to risk of the tourists,” conclude the authors, “but the high elasticity of substitution among the different tourist destinations.”

In other words, tourists ask, why look for trouble when I can choose from so many other wonderful spots that are completely peaceful? “Trouble,” it is understood, is perceived only when dramatically reported by the media. The problem for tourists is, “trouble” now seems to be everywhere, even in such serene spots as Bali, Indonesia, where 202 people (mainly tourists) died in a terrorist nightclub bombing in 2002.

Teitler’s and Bental’s research finds that Israel suffers a 0.8% decline in gross domestic product following a 10% increase in the probability of terrorism. This implies that a “quality” attack, in the words of Hamas, Hezbollah or ISIS, is one that is dramatic, lethal and, therefore, highly publicized, and so impacting perception.

In other countries, too, terrorists wreak havoc with local economies. Take Egypt, for instance.

In 2010, Egypt welcomed 15 million tourists. Then, by 2016, tourist arrivals were slashed by two-thirds to 5 million following the Arab Spring (Tahrir Square) uprising that began on January 25, 2011, an ISIS airline bombing over Sinai that killed 224, and deadly bombings of Coptic churches in Tanta and Alexandria.

Facing an economic crisis, Egypt has had to slash food and gasoline subsidies, which brought inflation to 31%, and has borrowed heavily from the International Monetary Fund. Its massive public debt is like a dark cloud over the economy. Terrorist attacks in Sinai by ISIS-linked groups have led Israel to close its border crossing at Taba.

IN 2018, the Grand Egyptian Museum, a billion-dollar project that showcases Egyptian antiquities, will open. It is five times bigger than the world-famous Egyptian Museum in Tahrir Square and will be the biggest archaeological museum in the world.

Will it revive Egyptian tourism and, thus, its economy? A couple of “quality” terrorist attacks could kill the potential gains.

As a journalist, I cherish the right of people to be informed. But I still worry that the dissemination of stark images and accounts of terrorist attacks is a powerful incentive for more such attacks.

Even Paris, one of the world’s supreme tourist destinations, has suffered. In the wake of the Charlie Hebdo massacre in January 2015 and coordinated attacks in Paris and St. Denis in November 2015, Paris got 1.5 million fewer visitors in 2016, and a 6% drop in takings from tourism, according to The Independent newspaper.

In Britain, Brexit (the vote to leave the European Union) caused the value of the British pound to fall steeply and, as a result, brought 20% more tourists, mainly to London. Now, terrorist attacks in Manchester and London have offset some of that increase.

What does the future hold? The Tourism Ministry, led by Yariv Levin, sees potential in China and Russia. Since 2012, China has become the world leader in outbound tourism. Some 135 million well-heeled Chinese tourists spent $261 billion abroad in 2016, up 12% from the year before. In Paris, Chinese tourists spend an average of 1,400 euros (5,600 shekels) at the upscale department store Galeries Lafayette.

There is also growing potential in medical tourism. According to the World Tourism Organization, Israel is one of the world’s top destinations, ranking third, after Canada and the UK. Each year, 14 million patients travel abroad for medical treatment, and this market is growing 15%-25% annually. Of these, 1.4 million are Americans, where health care is often super-expensive – and they spend more than $100 billion (357b. shekels) worldwide.

The cost of specific medical treatments in Mexico, Brazil or Singapore can be as much as 20% to 40% below typical US costs.

Quality is maintained by a rigorous international accreditation system. Among the top global specialties for medical tourism are cosmetic surgery, dentistry, cardiovascular, orthopedics, cancer, and weight loss.